Law firms of various sizes have begun to close down ahead of the professional indemnity insurance (PII) renewal deadline, with others contemplating closure to avoid paying spiralling PII premiums for the second year running, the Gazette has learned.

Apart from soaring premiums, firms trying to survive the 1 October deadline have complained of long delays between requesting and receiving quotes from insurers, and miniscule timeframes within which to consider and accept quotes – with some insurers demanding responses in just 24 hours. The Solicitors Regulation Authority has asked firms for evidence of poor practice by insurers, while Nigel Day, chair of the Law Society’s PII working group, said that certain insurers will be contacted about ‘unhelpful’ practices.

Conveyancing firms, and firms that have done conveyancing in the past, are finding themselves hardest hit once again as insurers raise premiums to cushion themselves from potential mortgage frauds.

The troubles have led solicitors and brokers to call for an extension to the 1 October deadline. However, the SRA said that it is ‘not possible’ to extend the deadline this year and that there are ‘no plans’ to move from a single renewal date next year.

Joe Golstein, partner at two-partner London firm B&G Solicitors, said that he will shut his doors after being quoted a renewal premium of £110,000 – up 450% from £20,000 in 2007, and equivalent to 25% of his firm’s turnover. ‘The insurers are holding the profession to ransom,’ he said, calling for an extension to the 1 October deadline and criticising delayed quotes from insurers. ‘We work bloody hard. Why should we have to work so hard just to pay rent, overheads, and the insurers? I would be better off working as a tube driver.’ Golstein said that 60% of the firm’s work is in conveyancing, and he made no claims on his policy all year.

Frank Maher, partner at Liverpool consultancy Legal Risk, said that one of his clients, a 12-partner firm, will enter administration in the next few days to avoid paying a six-figure PII premium. He said that another client firm with a £20m turnover is set to enter the assigned risks pool after uncovering major mortgage fraud problems.

A spokesman for the Association of British Insurers said he was not aware of insurers not giving enough time to consider quotes. He added that premium increases were a result of the rise in mortgage fraud risk, where ‘the last men standing are often solicitors’.

The Law Society runs a PII renewal advice service on 020 7320 9545 or email PII@lawsociety.org.uk.